Government meddling hurts first time buyers

Peter Simpson is the former president and CEO of the Greater Vancouver Home Builders Association and he’s got a column in the Vancouver Sun that strings together some numbers and anecdotes and then blames the federal government for hurting affordability.

Since this column is about first-time homebuyers, I must comment on federal Finance Minister Jim Flaherty’s changes to the rules governing federally insured residential mortgages, including a reduction in the maximum amortization period from 30 to 25 years.

It is not clear that a tightening of mortgage rules helped Canadians to manage their debt. What is clear is that the shorter amortization period has reduced housing demand by eroding affordability.

Now of course this ‘reduction’ in the maximum amortization period is actually just a reset to a historical norm, not to mention that it only applies to government insured loans.

Mr. Simpson refers to an older generation with homes that are paid off, but I can guarantee you that those homes were not bought on a 30 year amortization, so did longer morts help or hurt affordability? Is it possible that pushing more money into the housing market simply helped to drive up prices and worsen affordability?

It may be that Mr. Simpson is not primarily concerned with the well being of the first time buyer, but is instead concerned with a reduction of customers for his industry.

His conclusion is especially telling:

Finally, Vancouver-area pundits predict there is a sales shift to moderately priced homes, and a buyers’ market will continue until mid-2013. There is no assurance interest rates will remain low through 2013. The bottom line is it seems to be a good time to consider buying a new home.

Read the full thing over at the Vancouver Sun.

105 Responses to “Government meddling hurts first time buyers”

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    Some people are very worried about 2013. If you say something enough people will start to believe it. This is strategic and will not be the last article you will read. Are you scared? I would be. These guys will fight like a cornered animal to get their way out of this one. Greed is a powerful drug.

    Vote that truth down, bears.

    Well-loved. Like or Dislike: Thumb up 46 Thumb down 4

    @Con-Rad: “Some people are very worried about 2013.”

    Why?

    “If you say something enough people will start to believe it.”

    Why would that affect a market, aside from a temporary blip? For houses especially. The investment value of houses is clear. You buy a house to not pay rent.

    “Are you scared? I would be.”

    One should never make investment decisions based on fear. It usually turns out worse than greed.

    “These guys will fight like a cornered animal to get their way out of this one.”

    Who? There is nothing to get out of.

    “Greed is a powerful drug.”

    Certainly, and it becomes more powerful if realized.

    Hot debate. What do you think? Thumb up 21 Thumb down 3

    Ralph Cramdown Says:
    3

    Hidden among the mouldy folds of an otherwise dubious article are two iffy propositions:

    First, the assumption that house prices are the independent variable (“What is clear is that the shorter amortization period has reduced housing demand by eroding affordability.”) Um, nope. Everybody who wanted a house before likely still wants one. What about the people who wanted to sell before? Do they still want to sell? OK then.

    Second, that Flaherty is aiming for a permanently high plateau/soft landing/what-have-you (“if Flaherty and his government really want stability in housing markets…”) Have any of F’s actions signalled that he wants stability? Have he and Carney said or implied that they would be comfortable with stable prices? OK then.

    Hot debate. What do you think? Thumb up 10 Thumb down 2

    @Ralph Cramdown:
    “Have he and Carney said or implied that they would be comfortable with stable prices?”

    Sounds like it:

    Pressures in the Toronto and Vancouver housing markets are moderating, Canadian Finance Minister Jim Flaherty said on Thursday, with neither a bubble nor a hard landing in sight for the country’s property market.

    “I don’t think there is a bubble, or a danger of a bubble in Toronto and Vancouver. I’m actually comfortable with the fact that we’ve seen some moderation in pressures in that market, both of those markets and across the country,” Flaherty told reporters.

    http://ca.reuters.com/article/businessNews/idCABRE8931HC20121004

    I don’t think Flaherty really wants to bring down nominal RE prices at all. He just wants to cap consumer debt because Carney and (I am quite sure) Wall Street have been telling him that the country faces a catastrophe if he doesn’t.

    Problem is that simply capping consumer debt will almost certainly bring on declining prices. So prices are coming down not because F wants them to but because they have to.

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 2

    Anonymous Says:
    5

    Time magazine has an article about the Canadian real estate bubble and the comments from Canadians below the article are mocking the very notion that we could be in a bubble. VREAA summarizes:

    “The majority of comments below this article, as of 2 Dec 2012 p.m., are noteworthy for indignant hubris. When one sees terms like “laughable” and “little doubt” being used to describe positions, one should be particularly vigilant. Also interesting that the author and the publication are accused of sensationalism and “trying to generate a tempest”:”

    http://vreaa.wordpress.com/2012/12/02/time-magazine-asks-bearish-questions-about-our-re-market-canadian-readers-indignant/#comments

    Hot debate. What do you think? Thumb up 19 Thumb down 1

    Ralph Cramdown Says:
    6

    @patriotz: But as of the date of the Flaherty quote, prices in Vancouver had been declining for some time, with downtown Toronto condo inventories up markedly, and he would have known that. “Pressures are moderating” my ass. Sure, given his druthers, Flaherty would love a soft landing. But given a choice between reining in credit (knowing that prices would fall) and letting ‘er ride, you can see what he’s done. Opinions differ on the man’s intelligence, but I’d bet he’s been advised that it isn’t going to be pretty and is under no illusions.

    Like or Dislike: Thumb up 8 Thumb down 1

    Anonymous Says:
    7

    Gotta love this comment on the Time article by K. Navaratnam:

    The very notion of Canada having a real-estate collapse similar to the american one is highly laughable. It wasn’t merely in vogue to list Canada as a stable economy in the immediate aftermath of the 2008 financial meltdown… four years later, it remains the best performing economy in the west, with the Canadian dollar now being considered by the IMF for reserve currency status.

    The Canadian financial structure is far more risk-averse than its western counterparts and will remain so. While it is true that there are no doubt a few small bubbles in such cities as Toronto and Vancouver, they are concentrated in a few small neighbourhoods and mainly consist of condo properties. If there is any bubble in Canada it is the condo markets of downtown Toronto and West Vancouver and that is that. The country as a whole faces no such uncertainty as put forth by the author of this article – who is no doubt in awe of the spectacular economic performance of his northern neighbour.”

    Read more: http://business.time.com/2012/11/30/oh-no-canada-as-household-debt-skyrockets-will-canadians-face-a-2007-style-crisis/#ixzz2E04xOfOC

    Hot debate. What do you think? Thumb up 13 Thumb down 2

    Anonymous Says:
    8

    Commenters on the Time article are also under the delusion that buyers in Canada are required to have a min. 20% down payment and that Mark Carney was promoted as Governor of Bank of England because of his track record at managing Canada’s strong and healthy economy.

    The denial in those comments is shocking. Most bearish news story in Canadian media have a mixture of comments, including many bearish comments that acknowledge the market here is in trouble. It seems that the Time article has rubbed some Canadians the wrong way. I think Canadians get their backs up when they are being called out by Americans. These Canadians are essentially insisting that Canadians are superior and smarter than Americans, Spanish, Irish, etc. The irrational hubris of Canadians makes me embarrassed to be Canadian. Whatever happened to the days when Canadians used to be reserved, humble, polite and have an understated quiet form of patriotism?

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 1

    news junky Says:
    9

    From CBC:

    “A B.C. woman stands to lose her home to her lawyer, who is moving to foreclose on her to pay his six-figure bill…Fotsch got into the predicament after being sued by her ex-husband, even though she won the case and the court ordered him to pay her costs…

    Fotsch, 54, lives near Pemberton with her disabled son and earns a modest income. Her only asset is her house and the 12 hectares of land it sits on…

    A decade ago, her common law ex-husband Leigh Wilson went after Fotsch, trying to get a piece of her property after their breakup. The case took nine years to resolve, which was years longer than her lawyer had predicted, she said.

    “There was a three-week trial – three weeks! For my little place in the country. I mean, it just seems a little overboard and ridiculous,” Fotsch said. “There were three tables of binders, with papers stacked sky high.”

    She said she had already paid thousands in legal fees when the case finally went to trial in 2007. As it advanced, her lawyer said he wouldn’t continue unless she allowed him to secure a $100,000 mortgage against her property, at 18 per cent interest per year.
    Fotsch’s bill just keeps climbing because of $88 per day in interest charges.Fotsch’s bill just keeps climbing because of $88 per day in interest charges. (CBC)

    Vancouver divorce lawyer Jonas Dubas charges $300 an hour. His invoices to Fotsch include charges like $148.40 to simply call another lawyer and leave a voicemail message.

    “Lots of people get a divorce. For some of them, it costs a little bit, but nothing like this. I mean, this is huge,” Fotsch said.

    When she finally won, in 2010, the B.C. Court of Appeal ordered Fotsch’s former husband to pay her court costs. That would have covered at least part of her bill from Dubas — which, by then, had reached $90,000.

    “When they said he was responsible for the costs, I thought that meant that he was going to pay them,” Fotsch said.

    However, her ex-husband has since declared bankruptcy, so he hasn’t paid and she can’t force him to. Meanwhile, her legal bill has mushroomed — with $88 a day in interest charges — and has now reached $180,000.

    “I have a hard time sleeping at night. I’m one that keeps my bills paid. I’ve always paid my bills,” Fotsch said.

    She said her bank refused to lend her money to pay her lawyer’s fees because she already has another mortgage. Dubas has hired his own lawyer who is taking steps to foreclose on Fotsch’s home.

    “I’ve done nothing wrong. What have I done wrong?” Fotsch said, choking up in tears.”

    http://www.cbc.ca/news/canada/british-columbia/story/2012/11/30/bc-legalbills.html

    Hot debate. What do you think? Thumb up 22 Thumb down 8

    Has anyone ever heard a home builder or a realtor say that now is not a good time to buy? Me, never.

    Well-loved. Like or Dislike: Thumb up 44 Thumb down 3

    Anonymous Says:
    11

    @news junky:
    What do you call a bus full of lawyers driving off a cliff?…
    A good start.

    Hot debate. What do you think? Thumb up 24 Thumb down 11

    bullwhip29 Says:
    12

    Honestly, I am getting tired of these types of articles already. Those of you that feel the gov’t is giving you a raw deal, give your heads a shake. If that purchase of a so called “dream” home is suddenly not doable under the new guidelines, you shouldn’t have been thinking about it in the first place. Wake the f&*$ up everyone! What has transpired to date should not have come as a surprise. IMHO, they could have done a whole lot more, but didn’t, so consider yourselves lucky. FWIW, I see rates staying stuck at rock bottom levels for the foreseeable future (contrary to what all the so called experts are warning everyone about) due to the worsening economic situation here and elsewhere. Those of you that feel inclined to plant your feet firmly back on Earth should use this opportunity to chip away at the mountain of debt. As for the rest of you, continue on going about your things as if nothing has changed. This brief housing dip should be bought according to the author (and likely your realtor too), so go ahead and leverage up those balance sheets. Most importantly, do it now because rates are going to go up. The 1000′s of overextended RE “investors” across this wonderful city looking for a bid to whack will thank you. Whatever you do, don’t listen to those annoying bears that think a serious meltdown in prices is coming, that a stealth housing crash has already been underway for some time and that much of the HAM fueling the housing boom here has literally gone up in smoke. Remember, things are different here.

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 1

    Population Control by Retroactive Darwinism Says:
    13

    @news junky: “I’ve done nothing wrong. What have I done wrong?”

    Priceless! Lady, if you don’t know, you definitely got what you deserve. Your enormous sense of entitlement finally fell out of the sky and squashed you like a bug!

    Filed under the same category is Peter Simpson’s shameless Vancouver Sun plea for first time buyers to have the government give loans to idiots that the bank wouldn’t otherwise lend to. Where should these first time buyers live you may ask? Send them back to their parents’ basement or whatever country they came from. Call it Retroactive Darwinism. If you can’t afford to support your useless untalented spawn from cradle to grave, then use birth control!

    Hot debate. What do you think? Thumb up 17 Thumb down 22

    bullwhip29 Says:
    14

    @ rp1 December 3rd, 2012 at 5:12 am

    “Why would that affect a market, aside from a temporary blip? For houses especially. The investment value of houses is clear. You buy a house to not pay rent.”

    On planet Earth, markets don’t work this way. For the vast majority of homeowners, houses wind up being terrible “investments” especially after one factors in the cost of servicing the mortgage for a home that was likely out of their price range in the first place. The fact that you even mentioned the “investment value” of houses says a lot too.

    Hot debate. What do you think? Thumb up 8 Thumb down 2

    News Junky Says:
    15

    Just to be clear, I do feel sympathy for the lady getting foreclosed on in the CBC story. Hers is not a story of someone who binged on cheap credit and overpriced housing. It seems to me she was taken advantage of by her lawyer who is charging her 18% interest (is that even legal?) and who allowed the case to drag on for 9 years. But she does sound like someone who has poor financial management skills. The article says the bank wouldn’t lend her the money for the lawyer bill because she already has “another mortgage”. I doubt she owns additional real estate, so that is probably a second mortgage on her home. The article says the lawyer took out a mortgage on her home too, which doesn’t make sense. She sounds like someone who is in debt up to her eyeballs and is about to lose her home to pay off an unscrupulous lawyer.

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 3

    Exports Down. What to do? Says:
    16

    @News Junky: Difference? Unscrupulous Lawyer or RE Marketing Cartel.

    Pick your peril. It is always buyer beware. Fools will be eliminated.

    Recklessly engaging a divorce lawyer at all costs is no different than buying the biggest possible home. Both types of people are trying to win at all costs because they think they are special. The divorcee could have settled or at least shopped her case around and the RE kiter could have made themselves aware of the risk they were taking with borrowed money. I don’t see a difference.

    Hot debate. What do you think? Thumb up 20 Thumb down 4

    @News Junky:

    “Hers is not a story of someone who binged on cheap credit and overpriced housing.”

    Right. So it doesn’t really have anything to do with Vancouver real estate.

    Hot debate. What do you think? Thumb up 9 Thumb down 3

    Anonymous Says:
    18

    The Conservatives must be getting worried re: all the headlines about our imminent crash. I wonder if they will blink and roll back the mortgage changes?

    Like or Dislike: Thumb up 4 Thumb down 1

    Many Franks Says:
    19

    The Bank of Canada counter-attacked the WSJ article comparing Canadian debt to American debt, and it looks like they’ve just published the methodology.

    Long story short: to compare with the States, Canadian disposable income gets revised upwards by a fair chunk (big yay!) while Canadian debt also gets revised upwards by a small amount (tiny boo/hiss).

    The earlier report mentioned the social safety net as a major difference, but the follow-up analysis seems to have omitted that difference. (Hard to quantify?)

    Hope everyone feels extra-rich today.

    It should be noted that this is considered an interim solution and this note does not argue that this is a better or more representative measure.

    Sounds to me like a nice way of saying “this is a hack job to bolster our questionable international credibility and shouldn’t be used for much.”

    Hot debate. What do you think? Thumb up 11 Thumb down 1

    #14 @bullwhip29: What you’re saying simply isn’t true. Houses normally are a good investment if the value is stable and leverage is high. Good investments become bad investments when people overpay. By “clear” I mean the value of a house is easy to compute. The average person should be able to figure it out.

    Like or Dislike: Thumb up 3 Thumb down 4

    Firm trend of lower prices in Greater Vancouver as demographic changes bring motivated sellers to market
    FOR IMMEDIATE RELEASE ON VCI
    VANCOUVER, B.C. –December 3, 2012 – The pace of property sales slowed in November 2012 from October 2012 to be the second slowest month of November in the past 12 years. The slower selling pace combined with higher inventory levels continues to put downward pressures on home prices. In addition, the leading edge of a demographic change is appearing where aging home owners are selling their long-held principal residences in order to downsize in their retirement years. In certain higher priced markets, we are seeing older-aged sellers accept significant discounts on their asking price to complete their sale transactions. This is putting additional downward pressure on prices and setting the clearing price of the market lower. We foresee continued market weakness with no positive changes in macroeconomic factors expected in the next 18 months.

    GVREB reports that residential property sales of detached, attached and apartment properties fell to 1,698 in November 2012, the second lowest total for the month of November in the past 12 years. This total represents a 28 per cent decrease compared to the 2,360 sales in November 2011. Contrary to mid-year predictions from local real estate market associations, the second half of 2012 has not resulted in an increase in sales from the first half but instead has continued to deteriorate.

    November 2012 had a modest deterioration in sales pace which resulted in a seasonally unusual increase in the number of months of inventory. Prices also continued their downward trend with market-wide benchmark prices now down approximately 5% from their peaks in May 2012. With slow sales and high inventory, lower prices are now being set by the motivated and aging owners who desire or require their property to sell. These unlevered sellers are willing to accept very large discounts below their asking price in order to realize the large gains they have realized over their original purchase price. We believe this the front edge of a demographic trend that economists have predicted would occur.

    New listings for detached, attached and apartment properties in Greater Vancouver totalled 2,750 in November 2012. This was more than 10 per cent below the seasonal average and 15 per cent below the 3,222 listings in November 2011. However, as sales have slowed more than listings, the sales to new listing ratio of 62.0% was the second lowest for the month of November in the past 12 years. The number of active listings at the end of November 2012 was 15,680. Inventory decreased approximately 10 per cent compared to the end of October 2012 while MOI increased to 9.2.

    The Residential Reference Price for all residential properties in Greater Vancouver over the last 12 months decreased by 1.2 per cent to $600,200 in November 2012 from $607,200 in October 2011. From the peak price level in May 2012, prices have now decreased approximately 5 per cent in those 6 months.

    Sales of detached properties in November slowed to 637 units, a decrease of 30 per cent from the 916 detached sales recorded in November 2011, and a 39 per cent decrease from the 1,050 units sold in November 2010. On a monthly basis, the number of sales November 2012 was down almost 20 per cent from October 2012 and fell at a rate much higher than that of the attached and apartment segments. The reference price for detached properties fell to $916,000 compared to $936,200 in November 2011.

    Sales of apartment properties fell to 752 units in November 2012, a 25 per cent decrease compared to the 1,000 sales in November 2011, and a decrease of 28 per cent compared to the 1,052 sales in November 2010. In the past 12 months, the reference price of an apartment property decreased by 2.2 per cent to $362,500 from $368,600.

    Attached property sales in November 2012 totalled 309, a 30 per cent decrease compared to the 444 sales in November 2011, and a 24 per cent decrease from the 407 attached properties sold in November 2010. The reference price of an attached unit decreased 3.1 per cent from October 2011 to $459,000.

    “GVREB is a not for profit real estate bulletin prepared by industry analysts and market participants. Comments, information and questions can be sent to the general e-mail box at gvreb1@gmail.com

    Well-loved. Like or Dislike: Thumb up 66 Thumb down 2

    Ralph Cramdown Says:
    22

    @Anonymous: “I wonder if they will blink and roll back the mortgage changes?”

    You and every other real estate agent and mortgage broker.

    Hot debate. What do you think? Thumb up 17 Thumb down 2

    I couldn’t take the comments anymore on Time. I had to post replies.

    Hot debate. What do you think? Thumb up 11 Thumb down 1

    bullwhip29 Says:
    24

    @ rp1 December 3rd, 2012 at 9:15 am

    Price stability AND high leverage can’t occur at the same time (or least for any sustainable time period).

    Easy credit = high leverage = inflated prices

    The average person thinks today’s prices are normal and that even the slightest deviation from that should be viewed as an opportunity to buy. The credit bubble, which has been expanding for decades, has only begun to unwind itself. Perhaps one day, we will stop thinking of homes as trading/investment vehicles and simply view them as places to live. Perhaps the banks will also stop preaching to everyone that debt is good…ummm, or not.

    Hot debate. What do you think? Thumb up 9 Thumb down 1

    Village Whisperer Village Whisperer Says:
    25

    @Many Franks: Thanks for the links Many. Just as a point of clarification though, the WSJ article is countered by National Bank (which since it is replying to a US article is listed as ‘The National Bank of Canada’). This entity is not the Bank of Canada.

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    There are some big time societal issues associated with an elder generation that facilitates the expansion of debt incurred younger generations. That is, there are many arguments that debt accumulation is not the way to prosperity. However, this debt accumulation is definitely in the best interest of the older generation that is looking to cash-out.

    Hot debate. What do you think? Thumb up 10 Thumb down 1

    Many Franks Says:
    27

    @Village Whisperer: Whoops, thanks for the clarification. That explains the differences in methodology (social safety net vs. some fairly dry accounting line items).

    Like or Dislike: Thumb up 3 Thumb down 1

    Where was the complaint when the government relaxed mortgage rules back in the 2000s?

    Hot debate. What do you think? Thumb up 17 Thumb down 2

    Bull! Bull! Bull! Says:
    29

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 12 Thumb down 23

    @Bull! Bull! Bull!:

    “the federal government will provide credit with the stroke of a pen. Doing this will see a Vancouver crash averted”

    Good point! I wonder why they didn’t think of that in the US, Spain, Japan, etc. Maybe their pens were broken. I know ball points sometimes just quit on you. Let’s hope the federal government has been to Staples recently.

    Well-loved. Like or Dislike: Thumb up 63 Thumb down 5

    Vote Down The Facts Says:
    31

    @Anonymous: “I wonder if they will blink and roll back the mortgage changes?”

    It’s possible, but not very likely in my opinion. They clearly don’t have room to drop rates much further, so they’ve definitely created some wiggle room for themselves. Politically it wouldn’t make much sense to do a U-turn, though.

    Like or Dislike: Thumb up 7 Thumb down 1

    Can't wait Says:
    32

    @Anonymous:
    “I think Canadians get their backs up when they are being called out by Americans. These Canadians are essentially insisting that Canadians are superior and smarter than Americans, Spanish, Irish, etc.”

    It’s the colonial mentality of COCs coming out.

    Hot debate. What do you think? Thumb up 10 Thumb down 9

    Bull! Bull! Bull! Says:
    33

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 7 Thumb down 19

    Yellow Helicopter Says:
    34

    Hi All,
    Really appreciate all your comments and insight – I’ve learned so much!

    Hoping one of you can help – I’ve been watching an estate sale in North Vancouver since June or so… It’s a 5 bed bungalow that was originally listed at $895k, last listed price was $699k. Can’t see it anymore, and would love to know if it has sold and if so, for what price?

    Address is 519 East 1st Street, North Van. (With a lovely partial view of the grain elevator. ;-)

    Hot debate. What do you think? Thumb up 16 Thumb down 1

    Yellow Helicopter Says:
    35

    Whoops, sorry, – 518 East 1st street.

    Like or Dislike: Thumb up 4 Thumb down 1

    Anonymous Says:
    36

    @Bull! Bull! Bull!: “We know that if the Canadian economy is threatened by a real estate collapse, the federal government will provide credit with the stroke of a pen. Doing this will see a Vancouver crash averted, like it was in 2008.”

    Yawn…If they are able to avert a real estate crash with a stroke of a pen this will be the first time in history this will be accomplished. Do they not have pens in the US, Spain, Ireland and Japan?

    BTW if they were not looking for a contraction on house hold debt which means a real estate correction they would not have implemented the changes in the first place. They know the economy will suffer more in the coming years without the changes.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 3

    Ralph Cramdown Says:
    37

    @Bull! Bull! Bull!: “Let’s assume a real estate collapse is in the cards for Vancouver.”

    How bad are we supposed to assume things will get before the government steps in? 2 years of SFH inventory on the West Side? Places selling at 30% below assessment in Richmond?

    Hot debate. What do you think? Thumb up 7 Thumb down 3

    @Bull! Bull! Bull!:

    “That’s what you said in 2005″

    That’s right, I was one of the few people using the US crash of 07/08 to back up my arguments against Vancouver real estate in 05. I tell you, my prognostication skills are uncanny.

    Hot debate. What do you think? Thumb up 14 Thumb down 3

    Anonymous Says:
    39

    @Bull! Bull! Bull!: “That’s what you said in 2005, 06, 07, 08, 09, 10, 11. And now 2012″

    Yes and real estate was tanking around the world as you were denying it. We are now watching it unfold in Canada. Your still in denial. A little scared?

    Hot debate. What do you think? Thumb up 15 Thumb down 3

    #24 @bullwhip29: “Price stability AND high leverage can’t occur at the same time (or least for any sustainable time period).”

    Yes it can, if interest rates fall. It’s what happened over the last 30 years.

    Like or Dislike: Thumb up 3 Thumb down 4

    bullwhip29 Says:
    41

    @ Bull! Bull! Bull! December 3rd, 2012 at 11:04 am

    You are looking at things ass backwards. Vancouver (and Cda for that matter) is not the tail that wags the dog. The Fed can not backstop the market forever (as the BOJ could not). After having kept things relatively calm and stable for the past four years, I think the Fed is (or nearly is) out of bullets now. The markets have been in a funk ever since QE3 (or QEternity) was announced in Sept. The people are not buying the BS excuses anymore. What worked in 2008/09 won’t be effective now. IMHO, whatever surprises that are still to come will likely be of the negative variety. The markets in China never recovered since 2008 and have been in a steady decline ever since. If you believe this is being “engineered” by design, you are a fool. If you also believe the powers that be can magically fix everything in Europe with the stroke of a pen, then all the power to you for believing that too. By many accounts, Richmond has been a pretty reliable indicator when it comes to gauging the overall health of Asian investors. Perhaps you haven’t been paying close enough attention to see that things are an “Olympic Village” style mess in Rmd now. For example, homes that were either assessed and/or changing hands in the $1.5M range just ONE year ago are now being liquidated for $400-500k less. Condo projects all over Rmd are sitting only partially sold 1,2 3 or more years following the initial launch. Sellers that still have their heads in the clouds, have been sitting and wondering (for 2 years and counting) why no one has made an offer on their place yet. This isn’t is about silly assumptions, gov’t manipulation or what the “bears” might wish for, it is already happening in front of our eyes. My recommendation is to accept this and deal with it sooner rather than later because I think things will get worse for many more years (maybe decades) before they get any better.

    Hot debate. What do you think? Thumb up 22 Thumb down 3

    Karmic Retribution Says:
    42

    @Bull! Bull! Bull!: “That’s what you said in 2005, 06, 07, 08, 09, 10, 11. And now 2012″

    Yes and real estate was tanking around the world as you were denying it. We are now watching it unfold in Canada. Your still in denial. A little scared?

    ________

    I am a little perplexed why some bears even try to engage, convince or educate bulls on this site or in general. For those that have sat on the sideline for so many years and are waiting for affordable prices, or for that time when they can tell their mother-in-law they were “right”, why try and educate any bull?

    There is a lot of frustration, angst, and ill-will towards bulls, no matter how comfortable bears are with their renting option. Many sat on the sidelines and made no money, and watched idiots who got in and saw their values rise beyond to a point that no matter the level of correction, they will still be ahead of them.

    In those cases, why try and prove a point to a bull when all you get is the knowledge that you were right, and all the bears they get is the ability to take your advice, sell their house, and earn unprecedented tax free capital gains? Why share your years of detailed analysis and number crunching and have an idiot capitalize on that?

    If you want to screw all those cheerleading bulls over, just stay quiet during these coming months and years. And when those idiots show fear, just re-assure them that they have made the right decision in buying and owning.

    Its only when the arrogance has been kicked out of this RE infested city that we will see a partial return to a decent city…

    Well-loved. Like or Dislike: Thumb up 62 Thumb down 3

    Sidelines Says:
    43

    @Yellow Helicopter – that North Van house sold on Nov. 20th for 690K.

    Well-loved. Like or Dislike: Thumb up 22 Thumb down 0

    bullwhip29 Says:
    44

    @ rp1 December 3rd, 2012 at 11:49 am

    I guess your definition of price “stability” is different than many others.

    Permanently low interest rates will not equate to prices that go up (or remain “stable”) forever. Just ask the Japanese how that’s worked out for them as they deal with the deflationary death spiral they’re in and are not spending their hard earned savings as a result. Given that most in the western world don’t have any savings, I expect a deflationary crash of significantly greater magnitude than the one the Japanese have experienced.

    Hot debate. What do you think? Thumb up 5 Thumb down 5

    HAM Solo Says:
    45

    A little follow up on Ben’s presentation, and how it is received by a typical boomer housing bull.

    As a part of my day job I am part of a committee that oversees a particular investment portfolio. The “trigger puller” on this particular portfolio is a boomer of long tenure but little analytical capability. I mentioned that I had been to Ben’s talk and he was intrigued by the title on the presentation book, ‘the future of Vancouver Real Estate.” However, once I told him that Ben was basically calling for a crash, he dropped the package of slides like they were made of burning kryptonite. He then went on, completely unprompted about how much cash he and his spouse had sitting around and how if the market went down a little he was going to swoop in and maybe buy another house or condo. AND, he said, he had all sorts of friends in the same position.

    Normally, I have learned it does not pay to argue with fools, however, I did try to lay out the case that there were far more people in this city who are sitting at 5% or less of equity on some depreciating condo than there are people like him. However, he virtually rubbed his hands over his ears and started singing “I can’t hear you … I can’t hear you.”

    Ladies and gentlemen, if you are short this insanity, please meet the other side of the trade. Be not afraid.

    Well-loved. Like or Dislike: Thumb up 49 Thumb down 3

    RealityCheck Says:
    46

    One thing that would bring down housing prices is a higher interest rate by about 3%. Here’s why:

    Say mike has saved $200,000 for a down payment on a $500,000 house. Right now, he could get about 1.5% interest on that money, earning him about $250 per month. After the 3% rise, he would earn $750 per month. Also, housing prices would correct by about 10% (conservative estimate), and the house he was interested in would be about $450,000.

    So now what? He could continue to rent by putting the $750 towards rent and making up the balance. The $250,000 mortgage he has will cost approximately $650+ in interest payments alone. So, basically it is in mike’s best interest to wait it out for the bottom of a cycle.

    Now, Concerns:

    The Government might hold interest rates low very a very long time. They’ll manipulate official inflation numbers.

    The Government can play with increasing immigration, especially the temporary portion that isn’t reflected in stats or allow residency for house purchase program.

    All other tinkering with cmhc etc. Only brings demands forward. So that is irrelevant.

    Like or Dislike: Thumb up 6 Thumb down 3

    The usual suspects are slime balls Says:
    47

    Finally, Vancouver-area pundits predict there is a sales shift to moderately priced homes, and a buyers’ market will continue until mid-2013.

    If the great and powerful Vancouver-area pundits predict the buyers market will continue until mid 2013, then there is no need for the government to take action, as all will be well by next summer.

    Read more: http://www.vancouversun.com/business/First+time+homebuyers+face+continuing+affordability+problems/7638900/story.html#ixzz2E1RYhfFW

    Hot debate. What do you think? Thumb up 12 Thumb down 2

    Wakeup Call Says:
    48

    No need to fret BULL BULL BULL.

    There is still time to sell if you discount the price enough…you will be sorry you didn’t a year from now.

    With the main stream media no longer able to ignore what every respected economist has been trying to warn you about, 2013 could be worse for Vancouver and Toronto than Phoenix and Miami was in 2007.

    Hot debate. What do you think? Thumb up 10 Thumb down 6

    Anonymous Says:
    49

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 11

    Vote Down The Facts Says:
    50

    @N: “That’s right, I was one of the few people using the US crash of 07/08 to back up my arguments against Vancouver real estate in 05. I tell you, my prognostication skills are uncanny.”

    Do you think any Canadian crash will play out in the exact same way as it did in the US? One way of looking at it is that the Canadian government may not respond in the exact same way, and may actually be in a better position to act having observed what happened in the US.

    Like or Dislike: Thumb up 4 Thumb down 1

    bullwhip29 Says:
    51

    @ RealityCheck December 3rd, 2012 at 12:23 pm

    I think your concerns are valid. The Fed has already said it will keep its foot on the gas pedal for the foreseeable future, so therefore no urgency for any prospective buyer to do anything today. Flaherty and co will cave in at some point down the road and turn the spigots back on. Savers, in the meantime, will continue to get squeezed.

    Like or Dislike: Thumb up 2 Thumb down 1

    Anonymous Says:
    52

    @Anonymous:

    The conservatives have their eye off the ball, so I would not worry too much about that for now.

    They are currently obcessed with the Palestinian vote at the UN and are upset that 95% of countries voted for a Palestinain state, including most democracies but not Canada.

    If you read who gives money to the Conservatives and the free trips etc, you will find out why and also why they are silent over the use of cluster bombs.

    Hot debate. What do you think? Thumb up 18 Thumb down 13

    Anonymous Says:
    53

    @The usual suspects are slime balls:

    Why would the market suddenly change in mid-2013? It seems very random that the market would suddenly revert back to a sellers market, and the Vancouver Sun has no input onto why this would happen-except that the builders’ market seems to think so. Great reporting, Vancouver Sun! Personally I think the market will be much worse by mid-2013 (for sellers), because of too much household debt, worsening employment numbers etc. But of course, don’t pay attention to me, much better to pay attention to those who have a vested interest in selling houses!

    Hot debate. What do you think? Thumb up 18 Thumb down 2

    @HAM Solo: Maybe I am naive, and please feel free to let me know how far out of the loop I am, but I am fascinated by the comments that indicate people buying condos by the multitude. Is this still common, as in “I take 3″? At $4, 5, or 6 hundred thousand a pop? I realize that this is not happening now to the same extent, but really, was this practice the norm a while back or a lucky day once in a while for the sales department?

    Like or Dislike: Thumb up 6 Thumb down 1

    patriotz patriotz Says:
    55

    @bullwhip29:
    “Price stability AND high leverage can’t occur at the same time (or least for any sustainable time period). Easy credit = high leverage = inflated prices”

    You could lend 100% LTV without inflating prices if you simply imposed a price ceiling of 150x rental value (or 100x for condos).

    Hot debate. What do you think? Thumb up 9 Thumb down 5

    patriotz patriotz Says:
    56

    @Ralph Cramdown:
    “How bad are we supposed to assume things will get before the government steps in? 2 years of SFH inventory on the West Side? Places selling at 30% below assessment in Richmond?”

    When it becomes popular wisdom that there is a bust on in Toronto. They don’t give a rat’s ass about Vancouver and never did.

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 3

    Girlbear Says:
    57

    http://drkdesign.wordpress.com/2012/08/01/goodie-3987-west-21st-avenue/

    Started at asking $3.99mill now asking $3.488 (8s :) Viewed it. Cool digs but teeny rooms. Heard be got bid of $2.8mill and turned it down. Will be lucky to get $2.5mill in the end.

    Hot debate. What do you think? Thumb up 9 Thumb down 1

    Many Franks Says:
    58

    @bullwhip29: “Savers, in the meantime, will continue to get squeezed.”

    The average BCer is 39k into consumer debt. Yeah, they’re getting a break due to low rates and that is likely to continue, but I’d still rather be sitting on a downpayment that’s gathering little more than dust.

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    southseacompany Says:
    59

    Re: Peter Simpson’s artcle.

    Interesting contradictory statements. First he complains about the new rules making it harder to buy:

    “What is clear is that the shorter amortization period has reduced housing demand by eroding affordability. Some buyers will not qualify and this will disproportionately affect younger first-time homebuyers.”

    Then he finishes by saying:

    “The bottom line is it seems to be a good time to consider buying a new home.”

    So, which is it? Difficult time to buy a home? Or good time to buy a home?

    Perhaps, Mr. Simpson’s intellect is so large that it can hold two diametrically opposed views within it.

    Well-loved. Like or Dislike: Thumb up 40 Thumb down 2

    Keeping An Eye On The Pimps Says:
    60

    Hello Mr. Simpson,

    I read your column in the Vancouver Sun and immediately got on the phone to the Prime Minister.

    After a long conversation he assured me you don’t have to be concerned.

    He has already arranged to have Flaherty fired.

    First time home buyers will be given a tax free $250,000.00 Grant; the amortization will be increased to 75 years.

    Cameron will be appointed as the new Finance Minister.

    Please let us know how we can help further.

    Well-loved. Like or Dislike: Thumb up 52 Thumb down 1

    wetpantsclub Says:
    61

    @Keeping An Eye On The Pimps:

    Don’t forgot the tax credit for red “SOLD” stickers.

    Like or Dislike: Thumb up 4 Thumb down 2

    Yellow Helicopter Says:
    62

    Thanks 43 / Sidelines

    Like or Dislike: Thumb up 2 Thumb down 0

    Flaherty says he’s not worried about a housing collapse
    Dec 3, 2012
    “Finance Minister Jim Flaherty is not worried about a housing collapse, saying he is happy he has helped cool the market with the latest round of stricter mortgage rules.
    The finance minister says he is also encouraged Canadians are paying down their mortgages and credit cards, and taking on less debt…

    That was caused in part because Flaherty made mortgage payments more expensive in July by dropping the maximum amortization period to 25 years, but the minister says he has no regrets.

    A soft landing in housing is better than a boom followed by a bust, he says.”

    Hot debate. What do you think? Thumb up 17 Thumb down 2

    patriotz patriotz Says:
    64

    @southseacompany:
    “So, which is it? Difficult time to buy a home? Or good time to buy a home?”

    It’s not a contradiction. The best time to buy is when it’s the most difficult to buy, i.e. when financing is hardest to get and the fewest people are eligible.

    Maybe not what Simpson meant (if indeed he meant anything), but sometimes the truth comes out accidentally.

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 1

    Best place on meth Says:
    65

    @Yellow Helicopter:

    It’s showing as a new listing though.

    14 days on market with no record of the previous price drop.

    Hot debate. What do you think? Thumb up 18 Thumb down 0

    airborne canine Says:
    66

    Greater Victoria Real Estate Sales Slow but Steady in Buyers’ Market

    December 3, 2012

    VICTORIA BC – While the number of single-family home sales has held relatively steady over the last three months, Greater Victoria REALTORS® are noting a year-over-year decrease that coincided with tighter mortgage regulations imposed in July of this year. Amortization periods were reduced to 25 years for high-ratio buyers – those with less than 20% down payments.

    “The change from a 30- to 25-year amortization can result in an additional $150 to $200 on the monthly mortgage payment, which is impacting many first-time homebuyers and limiting the number entering the market,” says Carol Crabb, President of the Victoria Real Estate Board.

    Crabb also notes that the median price for a single-family home in Victoria remains relatively flat, increasing 1% over November 2011. “Sales may have slowed, but the median price of single-family homes has not decreased. Condominiums, the primary option for those first-time buyers, have a decreased median price of 10%.”

    Total MLS® sales for November 2012 were 366 compared to 373 the previous month; 202 single-family homes sold throughout the Victoria Real Estate Board’s region, compared to 293 in November 2011. The median price for single family homes was $540,000, up 1% from last November’s median of $536,500. The average price for the same period is up $48,373 (8%), but this is influenced by two sales over $2 million and one sale over $5 million. Month-over-month, the six-month average for single-family homes is flat.

    “We are now moving into the slower winter season. Both Canada Mortgage and Housing (CMHC) and Cameron Muir, Chief Economist of BC Real Estate Association, predict the next few months will mirror October and November, followed by slow growth for the balance of 2013,” Crabb says. BC and Greater Victoria continue to experience strong full-time employment growth, an expanding population and low mortgage rates.

    “For buyers, there is a good supply of homes on the market, so while they have time to conduct due diligence they shouldn’t expect large reductions on all properties. We are still seeing quick sales and the occasional bidding war on homes that are priced well.

    “Sellers have a lot of competition, so curb appeal, how the house shows and competitive pricing are key to moving from ‘For Sale’ to ‘Sold’,” Crabb says.

    Condominium sales remain stable with 98 in November 2012, compared to 92 in October 2012 and 104 in November 2011, although the year-over-year median price has declined 10%. Townhome sales declined 38% in 12 months, while pricing remains flat.

    http://www.vreb.org/mls_statistics/current_statistics.html

    Numbers are out for Victoria – continuing weakness but Condos are now in free-fall mode.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 0

    patriotz patriotz Says:
    67

    @VMD:
    “A soft landing in housing is better than a boom followed by a bust, he says.”

    That’s what we were saying in 2005, Jimbo.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 1

    Anonymous Says:
    68

    @southseacompany: There is no contradiction. The new rules make it harder to get financing, hence hard to buy (for some people). But, if you don’t need the financing or are able to qualify to get it, it is a good time to buy, with a good inventory and few other buyers to compete with.

    No contradicition.

    Hot debate. What do you think? Thumb up 6 Thumb down 5

    Anonymous Says:
    69

    @Anonymous: Apparently patriotz beat me to it.

    Like or Dislike: Thumb up 4 Thumb down 2

    @Anonymous:

    There is no contradiction. The new rules make it harder to get financing, hence hard to buy (for some people). But, if you don’t need the financing or are able to qualify to get it, it is a good time to buy, with a good inventory and few other buyers to compete with.

    No contradicition.

    Nice try Cam (or are you the other Cam? or myabe Helmut?)

    You conveniently left out the part about the extremely high risk that prices might, you know, actually decline now that there are fewer buyers to support current prices.

    Which means you could be losing hundreds of thousands of dollars over the next few years. That makes it not a very good time to buy.

    Hot debate. What do you think? Thumb up 10 Thumb down 2

    Keeping An Eye On The Pimps Says:
    71

    “Finally, Vancouver-area pundits predict there is a sales shift to moderately priced homes, and a buyers’ market will continue until mid-2013.”

    Contradictions Galore!

    Isn’t Bob Rennie a pundit?

    And has he not always maintained that local incomes /affordability don’t matter as Vancouver prices are supported by international investors?

    Hot debate. What do you think? Thumb up 16 Thumb down 0

    New Listings 144
    Price Changes 73
    Sold Listings 58
    TI:15974

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 149 Thumb down 1

    @paulb:

    Ker-thud!

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 3

    @Vote Down The Facts:

    “Do you think any Canadian crash will play out in the exact same way as it did in the US? One way of looking at it is that the Canadian government may not respond in the exact same way, and may actually be in a better position to act having observed what happened in the US.”

    I was actually joking. But, since you ask, I think that would be very unlikely for the two crashes to play out the same way, though not because the Canadian have learned from their neighbors. They have already shown the world that they don’t know how to do that.

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 2

    nice replies mac :)

    Like or Dislike: Thumb up 4 Thumb down 1

    #44 @bullwhip29: “Permanently low interest rates will not equate to prices that go up (or remain “stable”) forever.”

    Of course not. I don’t think it matters if mortgage rates are 3% vs 2% vs 1%. But in the last 30 years the rate fell from 18% to below 3%. That’s a huge buffer that provided stability to housing prices through all kinds of shocks. Hence, after 30 years people believe that housing can only go up.

    I think everyone piled into that trade at precisely the moment it no longer worked. Then in 2008, when faced with doom, we doubled down on what was clearly a ponzi scheme with government guarantees. History records many instances of similar behaviour meeting the same inevitable end. Housing has become an investment suicide cult.

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    my personal favourite:

    “After he rescues England, maybe he can rescue Ireland, Portugal, Spain, Greece, France and Italy. There’s no limits to what a GS employee can do”

    Read more: http://business.time.com/2012/11/30/oh-no-canada-as-household-debt-skyrockets-will-canadians-face-a-2007-style-crisis/#ixzz2E2rhr29m

    Hot debate. What do you think? Thumb up 20 Thumb down 1

    @Loon:
    The second search result on “ker-thud” for me was this blog entry:
    http://stickynotetoself.blogspot.ca/2007/04/ker-thud.html
    Some people still think it’s different here, but I expect a lot of similar blog postings here in Canada. Hell, I’ve already heard several similar stories.

    Hot debate. What do you think? Thumb up 13 Thumb down 0

    Here are December norms:

    year	sell	list	sell/list
    2001	2394	1856	129.0%
    2002	2205	1895	116.4%
    2003	2434	2301	105.8%
    2004	2065	1764	117.1%
    2005	2332	1735	134.4%
    2006	1686	1524	110.6%
    2007	1897	1695	111.9%
    2008	924	1550	59.6%
    2009	2515	2153	116.8%
    2010	1899	1699	111.8%
    2011	1658	1629	101.8%
    Mean	2001	1800	111.2%
    median	2065	1735	114.1%
    

    BTW, today’s sell-list ratio is the lower than any December days in either 2010 or 2011. If we don’t get 100% sell-lists in December then wow

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 0

    …more on today’s numbers: the 58 sales is the lowest I see for any December day in 2010 or 2011. (Note that Paulb took a break in December 2010 after Dec 14th, but still…)

    For listings, there was only 1 December day with higher than 144 listings in each of 2010 and 2011. So, it’s only one day, but lowest in 3 Decembers sales and highest in 3 Decembers listings is an interesting way to start the month.

    Well-loved. Like or Dislike: Thumb up 41 Thumb down 2

    “Note that Paulb took a break in December 2010 after Dec 14th, but still…”

    omg has Paulb been posting stats for us every day for 2 years? i hope you guys have shown him the love, at least “liked” his facebook page??

    Well-loved. Like or Dislike: Thumb up 50 Thumb down 2

    20K Inventory – April!

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 4

    @VHB: Dec. 1st is almost identical to 2011. Better to wait for a week before getting too excited bears.

    New Listings 146

    Price Changes 50

    Sold Listings 65

    TI:14182

    http://www.laurenandpaul.ca

    Hot debate. What do you think? Thumb up 20 Thumb down 12

    CashedOut Says:
    84

    First off, LOL at Peter Simpson’s conclusion to his article… way to stay on message.

    Second of all, seller in Burnaby North, like many markets are busy chasing the market down, with very few getting out in front of the declines. I’m fortunate to have access to MLS, and I’m seeing many listings that were priced >$1M as late as August now well in to the $800k range.

    This one, V972997, a foreclosure, is particulary extreme: original list $1.8M in Dec 2011, now listed at a fire sale price of 900k.

    A couple decent houses (V967123, V981232) in Brentwood Park area just sold for <725k. V967123 was originally listed for 988k in May!

    The sales caused cries of disbelief and anger from my close family who recently bought a house down the street for almost $1M in June. Their lot/house is nicer but still, you can see the doubt creeping in, even as they vociferously defend their 'investment'.

    Things are changing in that market, and fast.

    Well-loved. Like or Dislike: Thumb up 65 Thumb down 1

    @Jesse:

    Bravo! You predicted this a long time ago:

    Per GVREB press release: “With slow sales and high inventory, lower prices are now being set by the motivated and aging owners who desire or require their property to sell. These unlevered sellers are willing to accept very large discounts below their asking price in order to realize the large gains they have realized over their original purchase price. We believe this the front edge of a demographic trend that economists have predicted would occur. “

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 1

    @vangrl: Thanks, Vangirl.

    Like or Dislike: Thumb up 3 Thumb down 1

    @Troll:
    agreed that today’s sales/listing numbers look similar to Dec 1, 2011, and also agreed that we need to wait a few more days to draw a more accurate YoY comparisons. Just a few points:

    - on Dec 2, 2011, there were 134 sales/ 104 list. The first 5 business days of Dec 2011 saw S/L ratio of 83%
    - Dec 2011 had 21 business days, with Dec 24-26 landing on Sat-Sun-Mon.
    - Dec 2012 has 19 business days, with Dec 24-26 falling on Mon-Tues-Wed.
    - TI on first day of Dec 2011: 14182
    - TI on first day of Dec 2012: 15974 (+13%)
    - My guess is Dec 2012 sales -30% YoY, -30% MoM (Nov 2012 sales = Dec 2011 sales)

    - 2013 January is projected to have +13% TI vs Jan 2012, +35% TI vs Jan 2011, +39% vs Jan 2010, +1.5% vs Jan 2009 (!), ~+40% vs Jan 2008.

    
    

    - Assuming 2013 sales run at -15% YoY and TI at +13% YoY

    
    

    Projected MOI in 2013:

    MOI  2013 2012 2011
    Jan  10.6  8.0  5.7
    Feb   7.3  5.5  3.9
    Mar   7.0  5.3  3.2
    Apr   7.9  5.9  4.4
    May   8.3  6.3  4.3
    Jun  10.4  7.8  4.6

    If this projection is correct, then 2013 will have the MOI trough at 7.0 in March – and that’s still in “Buyer’s Market”.

    
    

    Conclusion: 2013 will be a fun year.

    Hot debate. What do you think? Thumb up 15 Thumb down 2

    @604x: I don’t know if I ever predicted demographic shifts contributing to weak prices/sales. I did state lower pop growth in 2011 in one of several plausible reasons for slower sales (and eventual price weakness) in 2012. Given 2012′s figures to date I expect similar weakness into 2013, all else equal.

    I also predicted 1700 sales for November. My prediction for December is 1176+/-34. This is based only on looking at past years’ trends.

    On that note it’s time to start firing up the 2013 prediction engines. What do people think 2013 is going to bring? I have some ideas but I’m sure more than a few people here can chime in with some good arguments.

    Like or Dislike: Thumb up 4 Thumb down 1

    Anonymous Says:
    89

    @Yalie: I did not say it was a good time to buy. It isn’t. I just explained that there is absolutely no contradiction in saying that it is hard to buy, but a good time to buy nonetheless. The very same point as made by patriotz at #64.

    So, if I’m Cameron, then maybe patriotz is Helmut?

    Like or Dislike: Thumb up 4 Thumb down 1

    @Anonymous:
    Fair enough, I stand corrected. But I would add to Patriotz point (and yours) that prices will likely lag behind policy for quite a while – i.e. just because credit is as tight as it’s going to get doesn’t mean prices have stopped falling.

    Like or Dislike: Thumb up 1 Thumb down 1

    @jesse:
    Jesse, if you have the time, I’d like you to be the next host of “2013 VCI Prediction Contest”.

    My spreadsheet skills are somewhat rudimentary and sometimes have to resort to manual work (yes, complete with my ~15 year-old scientific calculator from first year calculus). I’m seeing a much larger pool of participants for the 2013 contest and I don’t think I can handle it.

    Feel free to modify the predicted stats categories (eg teranet hpi?interest rate changes?) and scoring rules!

    Like or Dislike: Thumb up 2 Thumb down 1

    Bearstar patriotz is right. flaherty doesen’t give a rats about bc. Why?

    Look at it this way. Vancouver is tanking. Toronto is falling slowly. Vancouver pleads for a bailout. No way Vancouver gets it without the rest of the country wanting a piece too. Unless prices nationwide are falling beyond hope BC is on its own.

    Sorry bears better luck next time.

    Oh wait that’s good. Crap.

    I hate you guys.

    Hot debate. What do you think? Thumb up 12 Thumb down 1

    HAM Solo Says:
    93

    @ airborne canine

    Thanks for the great update on Victoria. Here’s my take on that market. Although a few of the private sector developers must have taken a financial hit, the higher end in Victoria is still reflecting decent provincial government bureaucrat wages combined with the low interest rate environment. There’s less volume, because the people who build and sell homes are falling out of the upper bracket, but the 40-something doctors, deputy ministers etc actually have improved affordability. Therefore prices are stable for now and demand for “bargains” in Oak Bay is at least understandable.

    However, the action is in condos. No more ponzi money @ 100% down, and probably much worse employment income outlook for the lower end of the spectrum. And the lower end in Victoria are maybe worrying about cutbacks of contract and non-tenured provincial gov’t employment jobs, or the lack of work in building trades.

    If you look at the Victoria price graphs, the average condo price has now fallen 21% from the double-peak top of November 2010 – March 2011. 21% is a BIG number. My guess would be that puts 80% of FTB from 2010-2011 underwater. Hey Genworth, you were wondering where your foreclosures are going to come from, look at these guys.

    Also, for those technical analysts out there, check out the decisive break to new lows on the average condo prices. Condos are crashing in Victoria. And with no ponzi money, negative investor cashflow, and a weak job market … you have to wonder what’s going to arrest the decline.

    Hot debate. What do you think? Thumb up 14 Thumb down 1

    Bag it and tag it Says:
    94

    @Troll. Why do we need to wait a week? Market has been tanking for a year now. We’re quite aware of what we’re dealing with by now.

    Like or Dislike: Thumb up 7 Thumb down 2

    Victoria doesn’t look anywhere near as overvalued as Vancouver. I know Victoria doesnt like to hear that but it’s not. It’s been in a state of slow decline since 2009 when Vancouver went the opposite way. It still has a way to go but at its current rate of decline will only need 15% drop to bring things close to corrected, not fully corrected but close enough. Thats not too far away.

    Think about that. Victoria is only a few years away from being mostly corrected. Maybe its worth a trip to Victoria to see whuzzup there. Go to househunt victoria with bearpoobah patriotz and annoy some of the realtor-slime-dickweeds who post there.

    Vancouver is a different story altogether. Another reason why Flaherty wont care about Vanocuver. He can look at victoria and say see no problem BC its those damn westcoast liberal elites in Vancouver who are out to lunch.

    Like or Dislike: Thumb up 3 Thumb down 4

    patriotz patriotz Says:
    96

    @Con-Rad:
    “Go to househunt victoria with bearpoobah patriotz and annoy some of the realtor-slime-dickweeds who post there.”

    The realtor who posts regularly on HHV is actually a very good source of information. The most annoying comments are from homeowners who think they own a can’t-lose investment.

    What I find most interesting about Victoria is that over-55 properties are taking the biggest price hits. So much for the theory that retirees can support inflated prices. Other markets highly dependent on retirees, i.e. up-Island and the Okanagan, are also seeing the largest declines in Canada.

    Like or Dislike: Thumb up 2 Thumb down 0

    @patriotz: Thanks for the clarification.

    Like or Dislike: Thumb up 0 Thumb down 0

    bullwhip29 Says:
    98

    @ Con-Rad December 3rd, 2012 at 11:59 pm

    Why would Victoria be as overvalued as Vancouver in the first place? Contrary to what many narrow minded residents of Victoria might tell you, this is not an apples to apples comparison at all. While most places might look “cheap” compared to Vancouver, that alone does not make them bargains. I personally know several families who took a shot a the Victoria market in recent years thinking/hoping it might evolve into something resembling that of Gr Vanc. At the end of the day, most of them wound up being utterly disappointed after having spent enough time there to realize life on the island is much, much different. Markets on the periphery like Victoria (and elsewhere in BC) have been on the decline longer than Vanc has been for a reason. It is only natural for leaves and branches to die off prior to the whole tree itself rotting from the inside out at a later point in time.

    Like or Dislike: Thumb up 4 Thumb down 0

    Ralph Cramdown Says:
    99

    @patriotz: “When it becomes popular wisdom that there is a bust on in Toronto. They don’t give a rat’s ass about Vancouver and never did.”

    I’m responding because of the number of up votes your comment got. I live in Toronto. You can check the stats — we almost always vote Liberal, sometimes NDP. As far as the Conservatives go, we’re not in play, so we get nothing. The Liberals take us more or less for granted, so we get nothing. The 905 is in play. I’m not saying this to whine, just to point out that, if you want to count politically, you have to be a swing riding. We aint.

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    Vote Down The Facts Says:
    100

    @bullwhip29: “Why would Victoria be as overvalued as Vancouver in the first place? Contrary to what many narrow minded residents of Victoria might tell you, this is not an apples to apples comparison at all. ”

    You mean it’s different there?

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    patriotz patriotz Says:
    101

    @Ralph Cramdown:
    “I live in Toronto. You can check the stats — we almost always vote Liberal, sometimes NDP. As far as the Conservatives go, we’re not in play, so we get nothing.”

    The Cons won 8 seats in the City of Toronto alone, and 32 out of all 47 GTA seats.

    The GTA has far more Liberal/Conservative swing seats than any other metro, which is why it is so crucial to the winner of any election.

    Like or Dislike: Thumb up 2 Thumb down 0

    Con-Rad Says:
    102

    @bullwhip29: I know enough about Vic that its price-income is about the same as Calgary’s. It is much closer to a bottom than Vancouver.

    Funny, Bears cannot appreciate that the correcting has been going on for years. Low rates make it look different.

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    Ralph Cramdown Says:
    103

    I stand corrected.

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    bullwhip29 Says:
    104

    @ Con-Rad December 4th, 2012 at 9:01 pm

    Yes, the correction in periphery regions has been ongoing for longer. This was to be expected. While this may mean prices in Victoria (and elsewhere) may look relatively inexpensive, I also believe that these very same regions will not stage a meaningful recovery until major markets like Vanc, Toronto etc reach escape velocity again. I think it is safe to say that we are a very long ways away from that happening. To add fuel to the fire, a change in leadership over in Victoria come the spring would not exactly be a positive thing for BC business in general.

    @ Vote Down The Facts December 4th, 2012 at 4:05 pm

    Yes, it is different there. Vanc was seen as another HK so prices were bid up to ridiculous, nose bleed levels. Those that made the bet that Vic prices would necessarily follow the same trajectory lost (as did those who bet Vanc would be another HK within just a few years).

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